COTW: Yen-tervention

September 25, 2023COTW: Yen-tervention

  • Japan’s currency is weakening again, sliding towards levels that, in the past, have led to the Japanese government stepping in to support the currency. This type of intervention usually consists of the central bank (in this case, the Bank of Japan) buying large amounts of yen using billions in U.S. dollar reserves.
  • The Japanese yen has been dropping sharply over the past few days, after the Bank of Japan announced that it has kept interest rates in negative territory, at -0.1%. Meanwhile, the U.S. dollar index has increased for 10 consecutive weeks, rising after the Federal Reserve’s decision to keep interest rates unchanged last week.
  • The yen is currently hovering around 148 to the dollar, nearing the 150-mark, a historically important level last seen a year ago. On September 22, 2022, the yen breached this 150 mark, which led to the Japanese government stepping in to support the currency and prevent it from weakening further. Japan’s Finance Ministry collectively spent nearly $68 billion propping up the yen on three separate days last year—on September 22, again on October 21, and on October 24. Whether or not the yen will once again break through the 150 mark, and whether the Japanese government will once again intervene remains to be seen.


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